Global Energy Storage Pipeline Led By NAWE And Asia With Battery Systems Most Popular

By Fitch Solutions

Key View

Our data demonstrates that the North America and Western Europe region have the largest energy storage project pipeline with nearly 67GW across 469 projects in development.
Battery systems will continue to be the leading storage technology type in the pipeline accounting for 55% of projects globally with the US and Australia as two leading markets.
Our data shows that 83% of all energy storage projects in development are currently in the pre-construction phases highlighting the potential upside for deplyoment.

Our data demonstrates that the North America and Western Europe (NAWE) region have the largest energy storage project pipeline with nearly 67GW across 469 projects in development. According to our Key Projects Database (KPD), NAWE followed by Asia are the two regions with the most active energy storage projects. Batteries, compressed air, thermal storage, and hybrid storage are the several types of storage that have been implemented across all regions.

Compressed Air: In a Compressed Air Energy Storage facility or plant, ambient air or another gas is compressed and stored under pressure in an underground cavern or container.
Thermal: Thermal Energy Storage heats or cools a medium to store energy for utilisation at a later time when needed. In its most basic form, this can entail storing heat in a water tank.
Batteries: Battery Energy Storage Systems (BESS) utilises rechargeable fuel cells to store and discharge electricity as required. BESS, which can be used to balance the electric grid, provide backup power, and enhance grid stability, can be made up of one or more batteries.
Hybrid: Combination of new plants and energy storage. In a typical hybrid power plant, battery storage and electricity generation are done on the same property. That often entails a solar or wind farm coupled with substantial batteries.

We believe that a key factor that is supporting the strong pipeline in NAWE and Asia is that several markets, such as the US, Australia and Mainland China are forecasted to see significant growth in their non-hydropower renewables capacity in the next decade and limited large scale baseload low carbon power generation options. We forecast that the US, Australia and Mainland China will have 35%, 26% and 31% of their total electricity generation from renewable sources in the year 2031 respectively. A large proportion of this will come from intermittent wind and solar power. Furthermore, we highlight that markets, particularly those with a high energy import dependence, are struggling with energy supply issues, which will support the more rapid development of energy storage systems. However, we note that our KPD underrepresents the number of projects in development in some markets such as Mainland China, owing to underreporting of project information with many plants coming online without being reported to the public. Our criteria for Key Energy Storage Projects exclude those below USD40mn or 10MW.

Battery systems will continue to be the leading storage technology type in the pipeline accounting for 55% of projects globally, with the US and Australia as two leading markets. The battery storage project pipeline is the most extensive of any energy storage type, with projects spread across all regions, reflecting the type’s geographical ease of deployment, maturity and scalability. As a result of its ability to store power from intermittent sources like solar and wind for later use, battery systems can facilitate a larger integration of renewable energy into the grid. Our KPD contains information on nearly 500 energy storage projects, 43% of which are hybrid projects. This is followed by compressed air at 2%, and thermal storage at under 1%, as these technologies are more complex and not yet matured compared to batteries. We believe that battery storage will continue to outperform all other types of energy storage, as it is currently the most cost-effective energy storage solution with costs expect to decline significantly over the coming decade. The National Renewable Energy Laboratory (NREL) expect lithium battery system costs to fall by 40% by 2030.

The US & Australia Will Remain Global Standouts

The United States leads our pipeline and has 115 battery storage projects in the planning and development stages, and the market is expected to have a non-hydropower renewables capacity of 608GW by 2031. The market has seen a surge in hybrid solutions given ongoing grid connection challenges with 97 new projects for solar PV plants. Additionally, our KPD includes 5 compressed air storage projects with a combined capacity of 1900MW, all of which are located in the United States. Although compressed air storage systems can store up to 10 GWh of energy, which would last for eight to twelve hours over a complete discharge at a pace near to its maximum. Australia, also has an extensive pipeline with 41 grid connected battery and 50 hybrid battery storage projects. The market’s high solar resource and dispersed geography has also led to significant grid bottlenecks and demand constraints.

Our data shows that 83% of all energy storage projects in development are currently in the pre-construction phases highlighting the potential upside for deployment. The majority of projects in the pipeline are in the pre-construction phase which adds potential for a much larger deployment of systems over the forecast period. As expected the bulk of these projects are battery systems. For compressed air storage, we highlight that all of such facilities are in the pre-construction phase. This is largely due to the technologies nacsency. The region with the most projects under construction is NAWE, with 19 of 112 projects in development and expected to be completed between 2022 and 2024. Furthermore, we believe this trend will accelerate. This is due to the strong track record for energy storage project commissioning in NAWE and the accelerating need to improve power supply security. As for thermal storage projects, our KPD reflects only one in construction in Germany which is being developed by Vattenfall. Construction on the 200MW project, which has a USD49mn investment value, is anticipated to be finished in 2023.